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3:01 Deputy Assistant Secretary for Export Enforcement Wendy Wysong offers FY2006's enforcement statistics: 34 criminal convictions w/$3 million in criminal fines, 104 administrative cases w/$13.1 million in administrative penalties and 180 warning letters. That includes both export and antiboycott cases. [See the BIS FOIA site for full details of many of these.]

3:13 Antiboycott slice of the pie included 9 administrative settlements totaling $80,000 plus 3 warning letters, which is more than last year (but still seems quite limited).

3:18 Prohibited boycott requests from Kuwait, Yemen, and Iraq increased from 2005. Most requests originating in Iraq are from the Iraqi Government.

3:25 BIS completed 242 pre-license checks (23 unfavorable) and 700 post-shipment verifications (145 unfavorable) in FY2006. Based in part on these checks, BIS will soon be publishing additional names to the Unverified List.

3:26 Wysong makes the case for voluntary self-disclosure: it's a mitigating factor of great weight, BIS gives at least a 50% discount off the maximum fine as credit and acknowledges the exporter's cooperation. There are signs that her pitch may be working. The number of VSDs has increased from 78 in FY04 to 148 the following year and 157 in FY05. Only 7 of the resolved cases from the past three years have resulted in fines of any size.

3:34 You do know that the maximum IEEPA penalty for an EAR violation while the EAA is lapsed is now $50,000, don't you? Otherwise, Wysong says that the principles and procedures behind enforcement actions will remain the same despite the higher penalties.

The US Second Circuit Court of Appeals [official website] Thursday upheld
[opinion text, PDF] the constitutional authority of the US president to
regulate financial transactions with foreign countries involving the
United States. The court rejected a claim by a Jordanian man, Osameh Al Wahaidy [profile], that former President George H.W. Bush [official profile] improperly invoked the International Emergency Economic Powers Act [PDF] to enforce a series of executive orders after Iraq invaded Kuwait in 1990. The orders made it illegal for a US person to transfer funds
[JURIST report] to anyone in Iraq. Wahaidy argued that the power to
create new criminal offenses belongs to Congress alone. In 2003,
Wahaidy pleaded guilty to willfully trying to violate and evade
executive orders by sending $100,000 to Iraq
[US DOJ press release] in October and November 1999 and in February
2000.

Speech by Doug Bain, Boeing senior vice president and general
counsel, at Boeing Leadership Meeting on Jan. 5, 2006, in Orlando, Fla.:

...Today, I think our biggest issue we face is export.

These are our five biggest export problems, and I think you can see
every heritage company and every business unit represented here.

We have not resolved QRS-11 [a gyrochip Boeing exported inside some
of its commercial jets without an export license between 2000 and
2003], which is a BCA issue. But the other four, we have paid a total
of $50 million in penalties, we've had three consent decrees and
several special compliance officers.

It's also affected the way we do business, because we've had to go the extra mile.

When I was in BCA, we had four people in export. Today, Mike Bair
[head of the 787 program] tells me, on the 787 program they have over
100.

The State Department's view of Boeing is we just don't get it. There
are too many violations, and as a result it's probably their intention
to hammer us on QRS-11.

The cultural question we need to ask is, do we view export as
somebody else's problem because my job is to sell product? Or is it all
of our responsibilities?

To Bain's question, I'll add another -- have you forwarded this to your general counsel yet?

Last spring we noted European reporting on an alleged export of an isostatic press to Iran by the Beligian company EPSI. Since then there's been little news -- until now. The story has busted open and the recriminations have begun. First on the chopping block is the chief of Beligum's federal security service, who has resigned. Paul Belien of The Brussels Journal blog has more:

It was revealed today that on November 3, 2004 a Belgian company
exported a machine to Iran which will help Teheran to build (nuclear)
missiles. The machine, a hot isostatic press, was exported by the Belgian company EPSI (Engineered Pressures Systems International) despite frequent and urgent requests by the American Central Intelligence Agency
(CIA) not to do so. From July 17, 2004 onwards CIA officers had been
warning their colleagues at the Belgian state security service, the Sûreté de l’État (SdÉ), that Iran Aircraft Industries was trying to buy an isostatic press in Belgium.

Anne-Marie Lizin, the speaker of the Belgian Senate, said today that
the Americans "asked the Belgian government with insistence not to
contribute, not even inadvertently, to the Iranian missile program."
Yesterday evening Koen Dassen, the head of the SdÉ, resigned. A report
presented to the Belgian Senate today says that Mr Dassen failed to
inform the government in Brussels of the American request. However, the
delivery of the isostatic press to the Iranians went ahead despite
negative advice from CANPAN (Commission d’avis pour la non-prolifération des armes nucléaires),
the Belgian Advisory Committee for the Non-Proliferation of Nuclear
Arms. In its report of September 28, 2004 CANPAN wrote that there was "an unacceptable risk that the machine will be used for activities
related to nuclear arms or nuclear explosions."

The American authorities also contacted the Belgian Customs to
prevent the exportation of the isostatic press, but all to no avail.
Justice Minister Laurette Onkelinx, the minister supervising the
Belgian state security service, claimed that the SdÉ had never informed
her of the American objections to the delivery of the isostatic press
to Iran. The report blames Mr Dassen for incompetence.

Unwilling as usual to take what flows from the pens of Bill Gertz (Washington Times) and David Sanger (NYT) as the final word on anything, Jeffrey Lewis has been doing a bit of digging into the recent imposition of Iran Nonproliferation Act sanctions on two Indian companies -- Sabero Organics Gujarat and Sandhya Organics Ltd. Get the full details on ArmsControlWonk, but basically Jeffrey had the crazy (to major media reporters at least) idea to just email the Indian firms and ask them what they sold to Iran. Even more crazy, he got a prompt response: phosphorus oxychloride. Which raises the question: what is it?

Phosphorus oxychloride (US Export Control Classification Number 1C350.c.3) is a chemical weapons precursor. It's on the least restrictive of the three Chemical Weapons Conventionschedules -- the one for stuff that may be produced in large commercial quantities for applications not banned under the convention. In other words, this chemical has a lot of innocuous industrial uses -- something the framers of the CWC recognized.

India and Iran are both parties to the CWC so there's no obligation under that agreement for the Indian exporter to even obtain an end-use certificate from their Iranian customer, let alone an overarching export prohibition.

Phosphorus oxychloride is also on the Australia Groupcontrol list. India does not participate in the AG, although supposedly they do subject most items on the AG list to their own national export controls. What that means on a practical basis -- what is permitted to be exported where and how effectively the laws are enforced -- I have no idea. Obviously though the export of phosphorous oxychloride to Iran is not a problem.

Of course if the chemical is of US origin (or contains controlled US content exceeding 10 percent by value) then its shipment from India to Iran would violate the unilateral US embargo, which prohibits many reexports of US items from third countries to Iran. But I haven't seen any USG statements yet accusing the Indian firms of violating the embargo per se. Rather, they hang their hat on the INA -- a nifty statute which doesn't require evidence of embargo violations for sanctions to kick in. "Credible information" that a "foreign person" transferred any number of nuclear, chemical, biological or missile proliferation-assisting items to Iran is all that's required. The country of origin of those items is irrelevant.

This is all going to remain pretty fuzzy unless someone from the US Government clarifies things or additional enforcement actions (requiring the public disclosure of more evidence) are pursued against the Indian companies.

UPDATE: Lewis has more, including details on the chemical exported by the second Indian firm -- trimethyl phosphite -- the export control status of which is similar to phosphorus oxychloride. Also, today the Federal Register published the State Department's official notice of the sanctions. Among other penalties, no military exports are permitted to these companies and no dual-use export licenses will be issued for shipments to them.